Refund of tax collected without authority of law remains available despite customer recovery and alternative statutory remedies

Sales tax collected without authority of law was treated as refundable even though the dealer had passed the burden to customers, because passing on the tax did not validate an illegal levy or alter its constitutional character. The High Court also held that alternative statutory remedies did not bar relief under Article 226 where those remedies were not adequate or effective and did not address the illegality on merits. Where the tax was admittedly collected without lawful authority and civil challenge was barred, writ jurisdiction remained available to direct refund of the illegal collection.

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Issues: (i) Whether sales tax collected without authority of law was refundable in writ jurisdiction despite the dealer having realised the amount from customers. (ii) Whether the existence of remedies under the taxing statute barred relief under Article 226 of the Constitution of India.

Issue (i): Whether sales tax collected without authority of law was refundable in writ jurisdiction despite the dealer having realised the amount from customers.

Analysis: The levy and collection of tax for the period in question were admitted to be unauthorised. The fact that the dealer had passed on the amount to customers did not alter the legal character of the collection or validate the levy. A dealer under the taxing statute is liable to pay tax on taxable turnover whether or not it is recovered from customers, and the passing on of the burden does not convert the dealer into a collecting agent for the State. Once the tax was found to have been illegally collected, the Court treated refund as a proper consequence of the constitutional prohibition against taxation without authority of law.

Conclusion: The tax was refundable and the objection based on collection from customers failed.

Issue (ii): Whether the existence of remedies under the taxing statute barred relief under Article 226 of the Constitution of India.

Analysis: The Court held that the statutory remedy was not an absolute bar to writ relief. The revision authority had not decided the matter on the legality of the tax but had declined interference on grounds of propriety, and the remedy under the reference provision was therefore not an adequate or effective alternative in the facts of the case. A civil suit was also unavailable because the statute barred such challenge. Where tax is admittedly collected without authority of law, the existence of other remedies does not prevent the High Court from granting relief under its writ jurisdiction.

Conclusion: The availability of statutory or civil remedies did not preclude relief under Article 226.

Final Conclusion: The petition succeeded, and a writ of mandamus issued directing refund of the illegally collected sales tax.

Ratio Decidendi: Tax collected without authority of law must be refunded, and the existence of alternative statutory remedies does not bar writ relief where those remedies are not adequate or do not address the illegality on merits.

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